Oil slid after its best three-day stretch since December as investors worried a sagging US economy would drag demand.
(Bloomberg) — Oil slid after its best three-day stretch since December as investors worried a sagging US economy would drag demand.
Growing builds in US crude inventories point to potential oversupply, while the Federal Reserve promises to continue raising interest rates, potentially destroying domestic demand in the process.
“There’s been a lot of hope that China reopening will be net positive for oil demand,” said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management.“What starts to override the market is this fear that US demand isn’t going to be able to hold up particularly with the Fed being higher for longer.”
Crude has been stuck in a $10 range from the start of 2023 with investors uncertain about the state of the US economy and the extent of the Chinese rebound. While traders wait for proof to emerge of China’s long-awaited return, headwinds are starting to gather as fuel inventories swell.
“Higher European distillate stocks, a lack of a Russian product disruption, a dud of a winter and overall long positioning are a driver of the recent weakness,” said Jonathan Wagner, global head of crude options at Marex.
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–With assistance from Natalia Kniazhevich.
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